Report pegs California ag losses from 2014 drought at $1.5 billion

WASHINGTON, July 16, 2014 – Researchers from the University of California, Davis, say the 2014 drought will cost the state $2.2 billion, with $1.5 billion in direct losses to agriculture and the loss of more than 17,000 full and part-time jobs, and result in the greatest depletion of water availability on record.

Their report, released Tuesday at the National Press Club in Washington, shows the dry conditions will cause losses of $810 million in crop revenue, $203 million in dairy and other livestock value, plus additional groundwater pumping costs of $454 million. The state, the biggest agricultural producer in the nation, is enduring its third driest year on record.

“This year we will have to get by with one-third less water in our regular supplies than normal,” said Richard Howitt, Professor Emeritus of Agricultural and Resource Economics at UC Davis, during a press briefing. Jay Lund, director of the Center for Watershed Sciences at UC Davis, said groundwater could replace as much as 75 percent of available surface water this year.

“Failure to replenish groundwater in wet years will continue to reduce groundwater availability to sustain agriculture – particularly more profitable permanent crops – during California’s frequent droughts,” according to the report.

“It’s quite clear that underground water is the reserve bank account,” Howitt said, adding that California does not adequately measure its groundwater levels. “It’s like someone so rich that they don’t balance their checkbooks…It made sense for California when we had water; it doesn’t make sense any longer.”

Net water shortages for agriculture in this year’s drought most severely affect the Central Valley with at least 410,000 acres lost to fallowing. Coastal and Southern California farm regions are less affected by the drought, with approximately 19,000 acres fallowed. Approximately 60 percent of the fallowed cropland, 70 percent of the statewide crop revenue losses and most of the dairy losses are likely to occur in the San Joaquin Valley, which is the southern part of the Central Valley, home to new GOP Leader Kevin McCarthy.

The Central Valley stretches 450 miles, from Redding in the north to Bakersfield in the south, covering 22,500 square miles of some of the world’s most productive agricultural land, an area slightly smaller than West Virginia.

Researchers estimated that more than 17,000 people statewide will lose their jobs due to the drought. Many of these are seasonal and part-time workers experiencing “pockets of pain and poverty” in the California economy, Howitt said. The drought is likely to stretch to a fourth straight year, through 2015, regardless of El Niño conditions, researchers said.

In addition to providing more records of regional groundwater use, the researchers recommended that the state maintain a more efficient water-trade market. “The absence of a central clearinghouse for water trade information prevents normal market information on current prices and quantities from being available to buyers and sellers, which complicates coordination of water movement,” the report notes.

The California Department of Food and Agriculture says that in 2012, the state’s 80,500 farms and ranches received $42.6 billion for their output. California remained the No. 1 state in cash farm receipts with just over 11 percent of the U.S. total. The state accounted for 15 percent of national receipts for crops and about 7 percent of the U.S. revenue for livestock and livestock products.

California's agricultural production includes more than 400 commodities, and almost half of U.S. grown fruits, nuts and vegetables. The report released today updates a May study that focused on the Central Valley.

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